Hot competition for development land is boosting land values howevera real gulf is emerging between small sites in high demand housing markets.
In contrast, the longer-term promotion and preparation costs associated with larger sites continue to take its toll on value growth and many remain mothballed and unsaleable.
Across the country some developers have recapitalised and are actively seeking land, creating competition again for small “easy” sites in areas with an identifiable housing need or shortage. The rarity factor of such sites in prime locations is really driving up prices, in some cases now within 20% of peak 2007 levels.
The average value of residential development land showed growth, albeit modest, over the past three months. Greenfield land values rose by an average of 3.2% and urban land values by 3.8%, taking annual growth rates to 16.6% and 14.1% respectively.
“But average growth figures disguise huge variations, and need to be treated with some caution,” says Yolande Barnes, head of residential research at Savills. “The development land market is now polarised on virtually every level: between North and South; high and low value housing markets; large, infrastructure-hungry sites and small easy to develop de-risked sites.